Every movement toward greater social freedom and uniformity of opportunity contributes to the same end. Next to slavery, social caste is the chief obstacle to free and fair compet.i.tion of laborers. Any barriers of race, social organizations, or even churches, which cultivate exclusiveness in any direction, in the end work hardship. If they bring temporary advantage to a few, they are sure to hamper the freedom of many. The welfare of the community is surest when social conditions favor the freest communication in all ranges of employment, whether in wage-earning or in profit-making.
The cheapening of transportation in recent years, bringing all the world nearer, has had various effects upon wages. It has destroyed, to a considerable extent, the inequality of wages between different regions of country. If laborers of any kind are scarce, a telegram will within a few hours bring numbers from some place where they are too plenty. The result is a tendency to greater uniformity throughout the world. As yet the full effects of this progress are not realized. Some hardships will undoubtedly be endured from the ready introduction of unskilled laborers from crowded countries into our less densely peopled country. But with a larger range of production opened by cheap labor, our better workmen will find more constant and more remunerative employment. If restrictions upon immigration are necessary, it must be to prevent too sudden a transition, hindering adjustment to new conditions. The danger of overcrowded population comes more certainly to the nation excluding itself from the great world by excluding the rest of the world from itself.
The general effect of improved machinery has been several times referred to already. Its advantages come to the wage-earner directly in multiplying employments and in multiplying the demand by cheapening products.
Indirectly, the benefits are still greater, because these cheaper products form the bulk of living for the workers. It is probable that even the better living thus provided has raised the efficiency of labor so as to command better wages. It is certain that every movement of civilization which gives a clearer knowledge of human nature and the world about us adds to the power of every man, whatever his work. We may welcome every element of progress in this enlightenment as a direct help to the portion of humanity recognized as wage-earners. The better the ma.s.ses of people understand each other the better each understands himself; and that understanding is the best protection against oppression of circ.u.mstances or of men.
_Variation in profits._-Profits in various pursuits, like wages, are affected by limited compet.i.tion. The need of special abilities and experience in any particular undertaking keeps back the timid from that enterprise, and the acc.u.mulation of experience of a peculiar kind hinders one from turning to other occupations. Even if a young man is willing to take the risk of inexperience as a manager, he can seldom gain the confidence of those who control capital. Hence compet.i.tion in new and untried enterprises is slight, and profits are often great. Other undertakings are of such a nature as to involve great uncertainty. The risk of failure r.e.t.a.r.ds the cautious, and so the most enterprising win great returns. In estimating such returns, we overlook the failures and count only the great successes. Sometimes accidental opportunities open to the few a limited range of enormous profits. Legislation fostering monopoly sometimes favors such opportunities. These are usually temporary, and such advantage cannot long be maintained under the most fortunate conditions. Secret methods have sometimes controlled the market for individuals with enormous gain, and in a few instances a nation has maintained such secrecy with apparent success. But these, too, quickly yield before competing enterprise, since wage-earners under such employers must share to some extent the secret, and will have the stimulant of enormous profits to use the secret for themselves.
_Profits in compet.i.tion._-Profits are themselves a stimulant to compet.i.tion, and compet.i.tion in every pursuit tends to reduce the profits.
If any circ.u.mstance apparently insures more than average profits in any undertaking, compet.i.tion becomes excessive and profits vanish. The promise of a tariff on wool leads farmers to expect an advance in the profits of sheep raising. Compet.i.tion begins in the purchase of flocks, by which the profits of those already in the business are greatly increased.
Compet.i.tion continues by multiplication in the flocks until sellers of sheep are more plenty than buyers. Thus, the stimulant to compet.i.tion has operated to lessen profits in the end. A famous sheep raiser in New York, when asked to give a maxim for success in the business, answered, "Buy when your neighbors sell, and sell when your neighbors buy."
Similar experience has been noted in various pursuits. The tendency, however, with wider knowledge of others" wants and efforts is toward a greater uniformity of profits. Modern methods of production and clearer perception of ways and means make it easier for compet.i.tion to have its full effect between different kinds of business, as well as in the same business. The more we know of our neighbor"s work through the daily press and extensive travel, the fairer is the opportunity for compet.i.tion to act. This tendency brings hardship to the weaker portion of managers engaged in any particular business. This makes the power of so-called trusts and great combinations apparently harmful. In the end, however, the result is more constant profits, though smaller, and the advantage of the whole community in a more stable business. It is even conceivable that the stimulant of fair profits may finally reach a larger proportion of the community through interest in the great establishments than in the past from the unequal and uncertain returns of independent managers.
Even among professional men, whose fees for services have somewhat the nature of profits, the same law of compet.i.tion, dependent upon supply and demand, holds sway. The compensation of an author for his publications, though protected by copyright, is dependent upon conditions limiting compet.i.tion or stimulating it. It is customary for surgeons, physicians and dentists to make a fee proportional to the demand for their services.
Thus the skilled dentist, who is wanted by ten times as many people as he can serve, raises his price till the demand is limited to meet his strength. This enables younger men at smaller prices to gain the opportunity to establish like reputations by doing equally good work.
_Profits in agriculture._-The profits in agriculture are subject to the same laws. Many influences operate in both directions. The limitation of land fit for agricultural purposes has a tendency in itself to increase the profits of land-holders, under the principle of monopoly, though its chief effect is on land values. The increasing wealth of the world, and the greatly increased wants of the civilized community, multiplying manufactures, limit compet.i.tors more and more. The relative number of farmers in our country is gradually diminishing, while the demand for food is actually increasing beyond the increase in population. Men are predicting every year a scarcity price for wheat,-unwisely, probably,-through the limited range of possibilities in wheat raising. The introduction of labor-saving machinery enables enterprising farmers to greatly increase their product for the same number of acres, and still further to increase the range of management so as to make larger farms a possibility. The rapid advance of means of transportation has so widened the range of compet.i.tion as to make the farmer in one part of the world compete with the farmers of every other part. The staple products, especially wheat, being so easily adapted to new countries, are constantly liable to over-production. At the same time the effects of a bad season in any particular region, while reducing the crop, are not likely to advance the price to the same extent as formerly. The opening of vast regions once considered deserts to a rapid settlement by farmers for the sake of the profits in land speculation has again and again wrought changes in the entire business of agriculture. Similar effects may be expected still with the development of South America, South Africa and Siberia.
All these facts tend now to make the profits in agriculture decline, and the fact that farm life has certain attractions in establishing permanent homes for families and life-time a.s.sociations, contributes to this tendency by holding people to their place as farmers for at least a generation. The possibility of independent enterprise, even with small profit, and the freedom of family life from interference of neighbors make large numbers of farmers willing to continue their business in spite of the reduced earnings.
_Fluctuation in profits._-It is proper to call attention to the rapid effects of any change in market upon the profits of any enterprise. Wages are in large measure an antic.i.p.ation of profits, and so far as they are affected by changes in market prices, it is largely through estimates upon averages. Custom has much to do with wages demanded and paid, but profits are fluctuating constantly with the fluctuation of prices, with every change of methods affecting compet.i.tion, with every introduction of improved machinery and with every accident of fortune.
No better ill.u.s.tration of this fact can be given than is familiar to every farmer in comparison of results from the work of different seasons. With the same outgo for labor he may find the profits of two successive years wide apart. One year has granted the fortune of good crops with fair prices, while the other has yielded him a half crop when the prices of his product in the world are low. Possibly the improved machinery in wheat raising, applicable to the great farms of Minnesota, Dakota and California, has caused him to bring a costly product into close compet.i.tion with a cheap one. Possibly, too, he has been tempted to excessive use of labor-saving machinery himself at too great cost for the transition, and it is more than probable that, stimulated by the high price of oats last year, he, with thousands of his neighbors, has made an extra crop of oats this year, to the actual destruction of the market. In all these cases the farmer himself suffers directly, while his hired hand is affected only indirectly by the unwillingness of farmers in some seasons to employ as much labor.
_Profits offset by losses._-The actual profits in any enterprise are often overestimated by our failing to notice that all the waste of unthrifty undertakings comes practically out of the profits of the more thrifty.
Wage-earners as a cla.s.s are protected against losses by frequent settlements and by public sentiment. The losses of the unthrifty managers come out of the acc.u.mulations of previous thrift, or else are borne by the thrifty men who have trusted them. The bulk of bad debts in failure of any enterprise is for materials, machinery, etc., furnished by other producers. In great financial depression, the profit-makers bear the evil directly, while the wage-earners feel the effects in the lessened compet.i.tion for their service.
Chapter XIX. Conflict Between Wage-Earners And Profit-Makers.
_The nature of the conflict._-The mutual interest of all whose energies are used in production, that the total product of wealth should be as great as possible, is often disturbed by doubt as to the fair division of what is produced. Under the modern factory system, the mult.i.tude sustain the relation of employes to a comparatively few employers. Antipathies are liable at any time to arise between these two cla.s.ses of workers. Those who officially control wealth in great enterprises are subject to suspicion of unfair treatment of their less independent employes.
Ignorance among the ma.s.s of laborers of the intricacies of business life contributes to such suspicion. In fact, the so-called conflict of capital and labor is a struggle for and against profits. Interest and rent are only indirectly involved in the question. The manager"s profits may be a.s.sumed by both manager and wage-earners to arise from reduction of wages.
The necessary reticence of business managers and the frequent arbitrary decisions as to wages help the wage-earner to feel that his interests conflict with those of his employer.
It is well for all to realize that this conflict, when there is one, is not so much between the rich and the poor as between the struggler for profits and the struggler for wages. In many instances the true solution lies in the same direction, if both could see the facts alike. It is an acknowledged fact that generous wages make enlightened, energetic laborers, and that greater profits come in the long series of undertakings from the most intelligent service. A farm-hand at $20 a month is sometimes worth more than two at $15. On the other hand, if markets are low and profits decline, permanence of employment will depend upon a readiness of wage-earners to accept a new adjustment of wages to conditions. Everything which fosters a better understanding between profit-makers and wage-earners contributes to the welfare of both. Everything which hinders such understanding injures the welfare of both. The cost of such friction is borne by both parties. But in the long run, the wage-earners are liable to carry the larger part. Even the destruction of property by rust, decay, or even violence, comes back upon the wage-earners who might have been employed in its use, quite as truly as upon the manager whose profits and acc.u.mulations are wasted.
_Obstacles to fair understanding._-The necessary ills connected with advancing civilization, in the laying aside of old methods for new, in the adoption of extensive machinery, and in the more perfect compet.i.tion with the world, fall upon both profit-maker and wage-earner. The wage-earner feels the immediate loss of his usual opportunities. The profit-maker feels the weight of providing new machinery, devising new methods and taking the longer range of chances. All these ills are met in time by intelligent and hopeful struggles for the best. In the worst conditions ever brought by improved machinery, a very few years have brought relief and improvement to the very cla.s.s of laborers injured.
The danger is that wholesome compet.i.tion upon a clear basis of fair understanding and free range of enterprise may be checked by legislation or organization for cla.s.s purposes. Against the interests of the ma.s.s of the people are all extended franchises, giving arbitrary control for long periods of years over any industry; monopolies sustained by patent rights or protective duties; trusts, so far as they imply a combination of men to resist the law of supply and demand; and laws which in any way favor one cla.s.s of people engaged in one kind of industry as opposed to any or every other.
Quite as prominent are those hindrances which come from every kind of fraud, including adulteration and misrepresentation of products, deception as to market conditions, false credit, and violence of every kind. The more perfect the light thrown upon all the conditions of production, the better the understanding which all men may have of a neighbor"s welfare, and the easier it is to put ourselves in our neighbor"s place.
_Strikes._-The methods of warfare between wage-earners and profit-makers are quite generally understood under the names of strikes, boycotts and lockouts. The occasion for a strike, which means a sudden stopping of work by the employes of an establishment, is usually some question of immediate advantage to the workmen. A desire for increased wages, fewer or different hours of labor, or the removal of some restriction upon habits or a.s.sociations, gradually becomes general, and through some permanent or temporary organization united action is taken. Quite frequently a strike is occasioned by a sudden and apparently arbitrary reduction of wages, affecting a large body of men. Many strikes are inaugurated in the interests of discharged workmen, when the organization to which they belong is supposed to be interested.
Thus a strike is always a form of warfare, and should be entered upon only after the same careful consideration that makes war sometimes a necessity.
Under ordinary circ.u.mstances and upon general principles, no body of workmen has any more right to suddenly stop work without notice than railway managers have to stop a daily milk train. The end to be secured must be important enough to humanity to overbalance the injury of the strike itself.
Since a strike is an effort to produce a corner in the labor market, it will succeed in the end sought only when conditions for cornering the market are favorable. Even then the loss to the entire community is considerable. The injury to property, while directly borne by the profit-makers, is widely distributed. First, all wages stop and wage-earners suffer. Second, ability to pay debts ceases and capital owners suffer. Third, insurance companies have their risks increased and all insurers suffer. Fourth, the market for the products is demoralized and all consumers suffer. Fifth, almost always social disorder results, police expenses are greatly increased, and all taxpayers suffer. Sixth, in the end the relation between employers and employed is more strained and less free than before, so that all humanity suffers.
The chances of success, as indicated by the record of many years, are small, and apparent successes are often temporary. And yet the world recognizes the right of a body of laborers to strike, just as it recognizes the right of revolution to secure the general welfare. Formerly a combination of workmen in a strike was treated as a conspiracy and punished as such. Now the general rule is absolute freedom of combination with rigorous repression of fraud and violence. This enables any body of men to make a serious test of the conditions of a labor market, at the risk, primarily, of their own welfare, but with serious strain upon the general good. It leaves room for the possible breaking down of old customs, which are stronger than law, and it sometimes proves, like a war for liberty, a means of great enlightenment to those who take part in it.
It is properly held as the last resort in the struggle for fair recognition of the rights and necessities of wage-earners.
It is noticeable that the tendency to strikes among the more skilled workmen is diminishing, and that the ma.s.s of communities are weighing their own interests more carefully as they see the general destructiveness of the method. At present strikes are expected among laborers of least skill, where they are, from usual conditions, least effective. Strikes are frequent among coal miners, where wages are liable to reach the lowest possible mark because of the ease of compet.i.tion from all parts of the world, though the effect of such strikes in bettering the condition of miners has scarcely been felt. The fact that destruction of property and the natural waste from strikes is so widely distributed among workmen and consumers r.e.t.a.r.ds popular sympathy, and the fact that strikes increase the risk of capital employed, and actually reduce the amount of capital in use, diminishes the chance of increasing wages or comfort in those employments where they are likely to occur. It seems evident that some better remedy for oppressive conditions of wage-earners must take the place of strikes.
_The boycott._-The boycott is a comparatively recent device for enlarging the field of combat to include not only the employes of an establishment but the consumers of its products. This is especially applicable to those industries the products of which are largely consumed by wage-earners, whose sympathies can be depended upon to carry it out. It asks all sympathizers to refuse to purchase products from the employer or firm attacked. A great bakery, for instance, can easily be ruined by a boycott, if its customers are chiefly wage-earners. It is easily applied in cases where custom has allowed the use of a label from some organization of workers. It has been attempted with some success against a railroad so related to other roads as to require the services of sympathizers with its striking employes to carry its freight to final destination. An instance of its widest application is in an effort to persuade the people of a city to refuse to patronize the street-car system.
The warlike nature of this method is apparent in the effort to use terror as one means of persuasion. In this case it uniformly overreaches itself in destroying public sympathy with the strikers. That it has a possible place in the struggle of wage-earners for their rights cannot be disputed, since it corresponds with the nature of a blockade or a siege in other warfare. But its nature as a method of warfare is equally clear, and its use in the interests of humanity belongs, with all war, as a last resort.
_The lockout._-Lockout is a name given to a method employed by managers to prevent the continuance of a strike by aid of the sympathy of employes not directly interested. It often happens that a comparatively small body of workmen in a great factory strike for higher wages, and are sustained in their strike by the sympathy and support of other workmen in the same factory. Under these conditions the employer is tempted to stop all work by a sudden closing of all shops, that the pressure of suffering among a large body of wage-earners may force the smaller body to accept the old conditions. The lockout seldom gains a popular sympathy, for the reason that employers appear to be using this method of warfare from a superior position of power. And yet no one can dispute the general right of employers to control of their business. Such a sudden stopping of business without an attack by a strike or some similar provocation would be considered inhuman, and popular sympathy would be wholly with the laborers and consumers interested.
_General evils of such conflicts._-The incidental effects of such violent opposition between profit-makers and wage-earners are certainly detrimental to all interests. The great mult.i.tude of farmers throughout the country depend for welfare upon the body of people using farm products, and all the waste of power from enforced idleness of wage-earners, managers and machinery is shared by farmers through diminished power of the rest of the world as consumers. In only a few instances have strikes affected agriculture directly, partly because the relations of employer and employed are so largely personal; partly because the supply of agricultural laborers for the season is usually large; but chiefly because wage-earners upon farms in this country expect eventually to become themselves proprietors, and so no separate organization is probable. In some countries, however, where wage-earners in farming communities are a cla.s.s by themselves, a strike has been the only method by which the barrier of custom and law, built up through many generations, could be broken. The great agricultural strike in England will always be remembered as having elevated the standard of labor and living in that country. It is to the interest of all farmers to cultivate a better understanding between employers and employed than can be maintained with any general expectation of strikes, boycotts, lockouts or similar warlike methods of settling fair wages.
_Trades" unions._-The organizations known as trades" unions, in which the wage-earners in any particular kind of business unite for self-protection, have had a gradually widening influence upon the relation of managers to employes. Once they were characterized as "machinery by which 10 per cent of the working cla.s.ses combine to rob 90 per cent," because the advantage secured usually comes out of the consumers of products. But today reasonable doubts of the general advantage of a well-managed trades" union have disappeared. If once they seemed a conspiracy against society in general, they are now recognized as a part of the general progress in mutual recognition of rights and privileges. It seems right to expect from them still larger usefulness, with a clearer perception of their importance. It is evident that they contribute somewhat to general intelligence of their members, and so far as this is true they help toward greater efficiency. At the same time they help to maintain stability of employment and stability of other conditions surrounding labor.
A brief enumeration of ends they may serve directly will help to appreciate their importance. First, they can as truly estimate the market value of wages by gathering statistics from all parts of the country and from other countries as can any organization in commerce estimate the market value of produce. Second, they can serve as an employment bureau in furnishing information of places where work is wanted, thus equalizing the advantages as well as the burdens of their a.s.sociates. Third, they can make more uniform and more satisfactory the customs in regard to the length of a day"s work or privileges of any kind a.s.sociated with the work as perquisites. Fourth, they can, if they will, find the true gradation of skill and of wages among workmen, so as to establish a natural line of advancement. Fifth, they rightly do, and can still further, serve for mutual support in cases of illness, and for protection of a community against fraud in pleas of poverty. Sixth, they may easily and properly, if they will, provide for insurance of character, both as men and as workmen, by issuing certificates, and under proper provision giving bonds, such as are required in many positions of trust. Seventh, they may extend their operations even to the taking of jobs that require a variety of work continuing through a period of time. Eighth, they can, under most favorable circ.u.mstances, undertake various stock enterprises, especially cooperative stores, thus securing an incentive to saving, and diminishing the spirit of antagonism against the profit-makers. Finally, though they have the best possible organization for a successful strike, if necessary, they can subordinate this disposition toward warfare to a broader machinery for fair consideration of all interests and for individual arbitration of rights.
Such organizations, under good management, win the respect of all, and find a recognition of their methods satisfactory. Farmers" clubs and granges, though far from reaching ideal efficiency, furnish suggestions of the general utility. Unfortunately, these organizations, having little if any basis of capital, have seldom been incorporated under the laws of the state. Could the powers and purposes of such organizations be established upon a basis of statute law, the range of their usefulness might be greatly increased. They might even sustain a method for enforcing in the courts the collection of wages, where the single wage-earner often accepts the half loaf in a compromise rather than meet the expense and loss of time involved in a law suit. Certainly the establishment of legal relations between the trades" union and the state would give to it a character and stability most likely to promote all interests.
_Federations of labor._-The so-called federations of labor, in which practically the only bond of union between individuals is the fact that all are wage-earners, have so far worked out but a small part of the problem involved in their existence. They have the advantage of uniting large numbers and a variety of interests; but they have the disadvantage of subordinating all other interests to the supposed conflict between employers and employed. Their tendency is almost certain toward lowering standards of efficiency, and attempting by cla.s.s legislation to get the advantage of mere numbers.
It is almost impossible that the organization shall be kept out of the field of bargains in politics and contrivance for special legislation, demoralizing to the whole country. Too often the votes of members are made a bribe for securing certain favors. In the nature of the case, they sustain a body of officers whose chief business is in danger of becoming that of either political agitators or political bosses. The machinery of organization is liable to reduce the independence of individuals. The organization itself is liable to demand a personal subordination almost equivalent to military rule, and the badge of the society may mark a man as under direction of authority. Even in questions where the majority rule, the force of the federation requires the caucus principle of absolute adherence, even though the majority represents the weakest and least intelligent part of the organization. The demoralizing effect of such methods, including wholesale trading of opinions, is liable to debase citizenship, and so to diminish the individual self-respect, which is the highest possible protection for laborers.
_Courts of arbitration._-Arbitration between employers and employed, in cases of serious misunderstanding, has long been advocated as a wise means of settling differences. The obstacles to its general, voluntary adoption are considerable. Employers object because it involves the admission of an outsider as a judge of their business methods. The employes object because they fear the sympathy of arbitrators with the superior intelligence, wealth and power of employers. Yet there seems no good reason why a representative body of men, chosen for character and ability, should not be appealed to by both parties in a contest which has already broken up the natural relations of business. As has been shown, the whole community suffers in every interruption of production and trade, and so far the community has the right, and should have the legal privilege, of insisting upon the fairest and quickest means of settling the controversy. In far less important difficulties between individuals, society insists that either individual shall have the right to bring the other into court.
Society is waiting only to settle the best form of a court of arbitration for labor difficulties. The trend of popular judgment is in favor of a well-organized commission, having the dignity if not the authority of a supreme court. That such commissions have not generally come up to the ideal is due largely to political influence among leaders of organizations, so that the commissioners become the choice of a faction rather than of the people. It is conceivable that the functions of judges in a series of state courts may be so enlarged under carefully framed laws as to include the duty of arbitration in labor contests.
If the people are not yet ready for compulsory settlement of such questions, the time is surely coming, under the enormous aggregation of industries and the immense combination of employes, when the judgment of the people expressed in due form of law will control both employer and employe. The whole world is recognizing methods of arbitration as better than warfare. It will soon insist that these minor wars within the commonwealth shall cease.
_Profit-sharing._-Some general system of preventing antipathy between profit-makers and wage-earners seems desirable. Certain interests are known to be mutual, and both employers and employed welcome any system by which those mutual interests can further the success of the business.
Among the methods proposed, and sometimes successfully employed, the most prominent is profit-sharing. This implies on the part of employers after payment of current wages a distribution, at stated times, far enough apart to secure a fair average in the profit and loss account, of some portion of net profits among all the wage-earners. The per cent of net profits to be thus distributed is matter of agreement, and the basis of distribution is naturally the scale of wages accepted by the employes in their contract for employment. The particular methods of applying these principles vary with circ.u.mstances, but in all cases depend upon the actual confidence of employes in their employers. The effects seem to be good, bad or indifferent, in proportion to the general intelligence and stability of the employes. With really skilled workmen, established in homes and feeling responsibility as citizens, profit-sharing stimulates to the highest energy. With weak and irresponsible wage-earners it is likely to bring waste and sometimes false notions in regard to wealth production.
The weakness of the whole system is the lack of provision for fairly sharing burdens in the constantly recurring periods of loss. If the employe"s share of the profits is consumed upon comfort or luxury, he is even less prepared than without such profits to meet the loss of not only profits, but his wages, in times of depression. If these additional earnings shared as profits become an insurance to the wage-earner, a sort of reserve for sustenance and safety in the necessary times of weakness in any industry, they stimulate the best characteristics of saving and character-building, and cultivate a disposition to meet all emergencies in patience. It is quite customary, therefore, in any system of profit-sharing to provide also an investment for the employes in a reserve fund, from which the necessities of the business and the needs of the whole community of workers may be met. Such a method, if wisely managed, makes the interests of the employes coincide with those of the employer.
If added to this there is ample opportunity for suggestions as to enlargement and improvement of the business in all minutiae, the best abilities of the workmen are called out and the heartiest sympathy is possible. There still remains against such a system the objections, that losses are not shared as truly as profits, and that employes are liable to require too intimate an acquaintance with the condition of their employer"s business to foster the success of the enterprise. Its successful application is so far confined to lines of business easily comprehended and direct in their methods.
_Sliding scales of wages._-Another device for connecting directly with the fluctuations of business any compensation of wage-earners is called the sliding scale of wages. This is an attempt to make each sharer in production depend directly upon the price of products in the market for rate of wages. The wages of different workers are adjusted to each other by contract upon some ratio established by experience, and then the wages of each are made to vary from month to month with the average price of the finished product in the general market. This subjects all parties directly to the fluctuations of the business in both profit and loss. Its success is dependent upon the confidence placed by employes in the fairness of the adjustment. It stimulates to highest productiveness when prices are high, and checks production slightly when prices are low. But it provides no direct method for readjusting business under the pressure of great changes in methods of management, nor does it save from strong antipathy against the improvement of a business by labor-saving machinery. Its successful employment depends in general upon the character and efficiency of employers and the general intelligence and enterprise of employes.
_Cooperative industry._-Cooperative industries are sometimes advocated as a complete solution of labor difficulties. The system implies a union of independent workmen, all of whom shall be sharers in the capital employed as well as in the labor involved, including management. The management of the enterprise is entrusted to chosen members of the cooperative force, and wages or salaries are fixed according to abilities employed, essentially upon the scale of current wages outside the cooperative enterprise. All profits are then shared among all members of the a.s.sociation in proportion to their wages. But an investment of such profits in the growth of the business is an essential part of the plan.
This method satisfies the ideal of equity in division of wealth produced, provided the basis of adjustment between cla.s.ses of wage-earners is accepted as fair. The princ.i.p.al difficulty in this respect arises in reference to the salary of managers and overseers. Such salaries are less clearly defined in the labor market, being usually complicated with profit-making, and are liable to be considered out of all proportion with the wages of other workers. If underestimated, the marked abilities required in management are likely to be withdrawn from the enterprise for independent management in profit-making.
The chief difficulties, however, with cooperative production grow from the want of confidence of the mult.i.tude of shareholders in their managers. Few kinds of business can be carried on successfully under a body of absolute rules, and fewer still will bear the delays and hesitation required for a general consultation of many authorities. The comparatively few instances of genuine success in cooperative production are due, in the first place, to the comparative simplicity of the undertaking; and, in the second place, to the genius of some organizer, who has been willing to contribute his superior abilities for the sake of the enterprise itself rather than the compensation.
A few principles may be fairly drawn from the general experience. First, all shareholders must be actual workers, in some way responsible for a part of the production. Second, the influence of each shareholder must in some way be held in direct ratio to his share in the production. Third, the system of accounts must be such as all can fairly understand. Fourth, the management must be entrusted to a chosen few, whose interests are chiefly in the business itself, whose character secures the confidence of all, and whose administrative ability is not too much hampered by rules.